Any change coming in deductibility of payroll used for ERC??

Technical topics regarding tax preparation.
#1
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Payroll used to compute the ERC is not deductible by the taxpayer. Since the revised bill now allows payroll forgiven from PPP loan to be deductible, do any of you think there is a chance there will be a change coming that allows the deduction of payroll used for ERC? My fiscal year S corp client's extended return is due soon. I am pulling out the applicable payroll expenses, Hate the thought of amended corp and personal returns if things change. I realize no one knows what will happen but any thought on the likelihood of a change coming?
 

#2
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I have done several hours of reading lately on the ERC since PPP borrowers are now allowed to take the ERC in 2020. I have read nothing that alludes to the possibility that the wages used for the ERC credit will be allowable as a deduction and I personally don't expect this to happen. Why not just wait as late as you can before the 1120S is due and if nothing changes in the law, file the 1120S without the wage deduction as you were planning to do. Meanwhile, check the IRS.gov site's section on the ERC for additional FAQ's that they post. If nothing has changed by April 15, obtain an extension to file the 1040. That way, the most you'd have to amend if there are changes that allow the ERC wages to be deducted is the 1120S. Theresa, are you filing amended 941's for 2020 or trying to pick up the ERC for earlier quarters on the fourth quarter 941 for 2020?
On a different subject, has it been determined for sure if a taxpayer who had a PPP loan and hasn't applied for forgiveness and now is allowed to take the ERC in 2020 can use the fourth quarter 941 to report the ERC for earlier quarters. I'm still not sure this is allowable or whether 941X's have to be filed for the earlier quarters [2 and 3] in 2020.
 

#3
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Hi Ken-Thanks for your input and I agree that I will just hold off on filing the 1120S. I am frustrated, as I'm sure we all are, that it feels like we cannot get anything completed with all these constant changes and not to mention the time spent, as we are gearing up for our busy season, keeping on top of all the constant changes and clarifications. I also find it hard to remember where I read certain information, when I'm looking to refernce it, as I have read so many different articles concerning all this!

I am planning on taking the retro ERC on the 4th quarter 941 per guidance in an AICPA article which indicates that "the bill allows eligible entities to claim the prior quarter's credits from 2020 in the quarter in which the bill was signed, which is the fourth quarter of 2020". However I am holding them until the last minute pending any changes to that.
 


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